Tuesday, October 19, 2010

The futures would have to fall all the way to 127^23 to cast serious doubt on the intraday charts and the long-term bullish case, but for now it'll take only the breach of a midpoint support at 131^27 to imply the bears still rule the minor cycle.  A precise bounce there followed by a failure of the support would imply more downside over the near term to as low as 130^06.

The Dollar Index didn't get past either of the two important peaks flagged here yesterday, and, to make matters worse, DXY couldn't even muster the two additional ticks it would have taken to surpass the 77.65 look-to-the-left peak identified in the chart (see inset).  While it's still too early to write off this two-day-old rally, signs that the long-term downtrend will soon resume are too obvious to ignore.

The futures are getting dragged down by the carnage tonight in IBM and AAPL, but when was the last time hard selling in the latter was not a brazen shakedown induced by canny buyers?  In any event, the E-Mini S&P is down just 7 points, a relative intraday bargain, and one must infer that night-shift predators are piling on.  I'd turn bearish if the futures were to open even-to-slightly-higher, however, since that would indicate that the thieves doing the buying tonight had given up on making a big score.  If so, look out below!  Please note that the hourly chart would turn bearish on a print at 1155.00.

We hold a long-term position of 800 shares with an adjusted cost basis of 13.07.  I'd raised the prospect earlier of doing some covered writes if and when a Hidden Pivot target above $28 is reached, but we'll put that plan on hold for now, since, like Silver itself, the stock looks to be consolidating for a shot at something bigger. ______  UPDATE (Sunday night, November 7):  SLW has shown such pluck blowing past a clear Hidden Pivot resistance at 32.95 (60m, A=26.07, B=30.27) that we'll let our profits -- currenly $16,000 on paper -- run some more before we try covered-writing the stock.

Silver was showing a bit more pluck than Gold shortly after midnight Tuesday EDT, resisting the exhortations of sellers to simply roll over.  A midpoint support nearby at 23.980 beckoned nonetheless, but that would likely be the worst of it if bids are pulled to bring prices down.  For your information, and to be prepared for the unlikely, the 'd' target associated with that midpoint is 23.450.  ____UPDATE (10:14 a.m. EDT):  Good thing we were ready, since, once silver cracked the midpoint support, it slid all the way down to 23.455, a half-cent from the 'd' target given.

The futures rebounded from yesterday's bottom with a bullish impulse leg of hourly-chart degree, but buyers were showing sign of fatigue shortly before after midnight EDT Tuesday.  The slippage is slight so far, but it still has a few dollars to go before support comes available at 1363.70, a Hidden Pivot midpoint associated with a 'd' target at 1351.80.  Another such pair of supports, but of larger degree, lie at 1359.00/1342.40.  Although an upthrust touching 1377.10 would make all of those numbers moot and put bears on the run, if the futures continue to ease we should take note of the quality of support at each of the four Hidden Pivots.  As always, an easy breach of one would imply the next is likely to be achieved.  Officially, we hold two contracts with a cost basis of 1353.30.  Our price objective is 1380.00, where we'll plan on selling one contract if the opportunity should arise. For now, both contracts should be stopped at 1362.10.  _______ UPDATE (10:05 a.m. EDT):  Just before gold plummeted at dawn, we exited our position on a stop for a theoretical gain of around $1800.  Although the futures overshot our lowest target, the selling has yet to breach a single prior low of daily-chart magnitude.  The first lies at 1325.60, $7 beneath the so far intraday low, and the second at 1297.00.  Both would need to be exceeded -- today -- before we need infer that something more than a minor shakeout is occurring.

Here in Colorado, it’s especially difficult to escape the vitriol and mudslinging of Campaign 2010. The closely watched Senatorial race between Democrat Michael Bennett and Republican Ken Buck has attracted a torrent of out-of-state money, and it sometimes seems as though all of it, a reported $750,000 a day, is being used to finance the attack ads that have come to dominate the local airwaves. Elsewhere in the country, it’s the same unpretty story -- no doubt in part because Democratic candidates would rather not talk about, much less defend, President Obama’s heavy-handed initiatives. Thus, in the last few days alone do we find one Republican smeared with the charge of rape, and another, Rand Paul, accused of having tied up a woman 30 years ago and commanding her to worship a false idol. If you’ve been following the news, you know we didn’t make this up. Even the President got into the slimy, suppurating spirit of things recently, accusing the U.S. Chamber of Commerce of taking foreign money to back right-leaning candidates.  But even the New York Times wasn’t buying it -- nor, apparently, was anyone else -- and it now appears the mainstream news media is simply going to let the issue die before their Anointed One makes even more of a fool of himself. And yet, putting aside all of this toxic sludge, we find ourselves positively excited about the possibility there's a revolution brewing and that actual political change could occur as a result of the election.  Yes, we know, it doesn’t much matter whether the country elects Republicans or Democrats -- the long-term results will always be roughly the same.  But when we talk about revolution, it has less to do with changes in the political make-up of the House and Senate than with vastly larger changes